Supermarket coffee rivals Kraft Foods and Procter & Gamble Co. will face off in the upscale mail-order arena as P&G moves in with a test of its Millstone brand.

P&G, which has seen sales of its No. 2 supermarket coffee brand Folgers slide in recent years, has launched Millstone Signature Blend mail-order coffee. The program custom-matches consumers to various blends of premium coffee, depending on taste preferences indicated through questionnaires.

DIRECT MAIL, PRINT ADS

P&G is backing the test with direct mail and print ads by Rapp Collins Worldwide, New York, including an insert in the March issue of Martha Stewart Living.

The mail-order coffee market is worth an estimated $100 million, said Dan Cox, president of consultancy Coffee Enterprises.

Kraft, marketer of top retail brand Maxwell House, has built its Gevalia and European Coffee House mail-order brands into an estimated $60 million business since 1984, Mr. Cox said.

The delivered price of P&G's Millstone is 15% to 20% lower than Gevalia.

Kraft put more than $5 million in print and direct mail ads behind its programs last year, according to Competitive Media Reporting.

Starbucks Coffee Co. does about $17.8 million a year through various direct marketing channels, including America Online, a spokesman said.

The mail-order market pales beside the $3.3 billion supermarket category, but margins for mail-order businesses can be much higher than with supermarket channels, Mr. Cox said.

"What really makes Millstone Signature Blend unique is that we help custom-match people's taste to the blend of coffee," a P&G spokeswoman said.

She said the program is an opportunity to build on the Millstone business, a $22 million supermarket specialty brand, according to Information Resources Inc.

SUPERMARKET REVAMP, TOO

P&G also is updating Millstone's supermarket product with a new logo. It launched new TV and print advertising last year via N.W. Ayer & Partners, New York.

Millstone got $2.8 million in ad support last year, CMR said.

The Millstone test comes as supermarket unit volume erodes for P&G's Folgers, down 6.5% in the 52 weeks ended Jan. 28, IRI said. The category as a whole is down 4.5%. Unit volume was up 0.9% for Kraft.

Specialty coffee is the fastest-growing segment, having captured about 10% of the supermarket category in recent years.

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Jack Neff

Jack Neff, editor at large, covers household and personal-care marketers, Walmart and market research. He's based near Cincinnati and has previously written for the Atlanta Journal Constitution, Bloomberg, and trade publications covering the food, woodworking and graphic design industries and worked in corporate communications for the E.W. Scripps Co.